The minimum wage, tip credit

In 2007, the federal minimum wage was increased $.50 each year for three years.   Businesses had to adjust to these changes, right size operations and increase prices.

In 2014, Bill No. 312-33 proposed to raise Guam’s minimum wage from $7.25 to $10.10 in the next three years.  GHRA firmly opposed the bill.  Amendments were made and the bill was passed into law with a $1 increase changing the wage from $7.25 to $8.25.  GHRA fought hard to get the legislature to approve a separate, but related bill requiring an Independent Economic Study (IES) be completed to better understand the impacts of the $1 increase before any future wage increases be considered.  The IES requirement was also passed into law before the $1 increase went into effect.

In 2016, the legislature sought to increase the minimum wage before the completion of the IES.  GHRA staunchly opposed the bill and implored the senators to complete the IES requirement.

In late 2016, the IES was completed and results were published.

In late 2016, the legislature introduced Bill 20-34 to increase the minimum wage.  GHRA, Guam Chamber of Commerce and Guam Contractors Association began working with the sponsor of the bill to consider amendments and a more comprehensive approach.   

In 2017, GHRA held dozens of meetings with industry stakeholders, members and elected officials to present the recommendations voted by the GHRA membership as proposed amendments to Bill 20-34.  The bill is currently being amended and will need another public hearing.  The proposed amendments include:

  • increasing the minimum wage from $8.75 per hour by January 1, 2018 and $9.20 per hour by January 2, 2019 over two years in two tiers; 
  • not allowing a minimum wage increase to $10.10;
  • introduce a youth wage for 14 through 17 year olds employed at $7.25 per hour by January 1, 2018;
  • re-establish the tip credit wage at a minimum wage rate not less than $7.25 for any employee who customarily and regularly receives tips or gratuities from patrons or others and can establish records of tips or by the employee's declaration for Federal Insurance Contributions Act (FICA) purposes for each pay period.  Employees cannot receive less than the minimum wage for all hours worked.  If the tips actually received by the employees combined with the wages paid by the employer do not at least equal the minimum wage, the employer must make up the difference;
  • invest in workforce development and coordinate government resources to increase vocational studies and training opportunities as a means to provide skill sets so that entry level employees can command wages well above the minimum wage.